Black Panther: Wakanda Forever
Disney Q1 Content Licensing/Sales Operating Loss Widens, Including Home Entertainment
February 8, 2023
Disney Feb. 8 reported a “content sales/licensing and other” business segment operating loss of $212 million in the first quarter, ended Dec. 31, 2022. The loss was 86% greater than the operating loss of $114 million in the previous-year quarter. Revenue for the segment, which includes Disney Studios, Marvel Studios, Pixar Animation, Lucasfilm, 20th Century Studios, Searchlight Pictures, television production and home entertainment, increased 1% to $2.5 billion, from $2.43 billion.
The increase in operating loss was due to lower TV/SVOD distribution results, higher overhead costs and a decrease in home entertainment distribution results. These decreases were partially offset by higher theatrical distribution results, which included ongoing revenue from Marvel’s Black Panther: Wakanda Forever, and theatrical revenue from Avatar: The Way of Water (released Nov. 11) and Strange World (Nov. 23).
Speaking on the fiscal call, CFO Christine McCarthy said the segment’s results came in below the guidance given in November, primarily due to the softer-than-expected performance of certain theatrical releases, including Black Panther: Wakanda Forever.
“In the second quarter, we believe that content sales, licensing and other operating results will be roughly breakeven,” McCarthy said.
The decrease in TV/SVOD distribution results was primarily due to lower sales volumes of both movie and episodic television content reflecting the shift from licensing content to third parties to distributing it to Hulu and Disney+. The decrease in sales of episodic television content was also driven by the comparison to a license of animated series in the prior-year quarter.
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“The decrease in home entertainment results was due to lower unit sales of new release titles, reflecting fewer releases, and catalog titles,” McCarthy said.
The animated musical Encanto was Disney’s top-selling packaged-media release in 2022.